She’s zapping data centers – for now.
Gov. Kathy Hochul on Tuesday issued a first-in-the-nation ban on large-scale data centers in the Empire State – a moratorium that managed to tick off both supporters and opponents of the artificial intelligence projects.
The executive order Hochul signed will pause new permits for so-called “hyperscale” data centers trying to tap into New York’s electrical grid for up to a year – after the gubernatorial race this fall in which she’s running for re-election.
Gov. Kathy Hochul announced Tuesday that New York state regulators will not issue environmental permits for large-scale data centers for the next year. Dennis A. Clark for NY Post
Hochul argued she pursued a middle-ground course between protecting the state – and its already-strained power grid – and helping to incubate the rapidly developing AI industry.
“I don’t want New York to just be first. I want New York to be first in the right way,” she said during a news conference in Brooklyn touting the ban.
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But Hochul’s unilateral, election-year move accomplished a rare feat: uniting groups that are sharply divided over data centers in shared dislike for her solution.
Business and tech groups warned the Democratic incumbent risked jeopardizing jobs and economic development, arguing companies will be forced to move data centers elsewhere — leaving New York in the dust as the AI industry expands.
The Data Center Coalition argued the yearlong moratorium would “undermine New York’s economy and send a signal that the state is closed for business.”
“While states like Virginia and Texas are far more likely to be approached by possible developers, the fact of the matter is that a statewide moratorium strips away local control and a community’s ability to decide on projects that could be pivotal to their economic growth and job creation,” said Justin Wilcox, executive director for the upstate New York business group Upstate United.
“We simply cannot claim to be a state at the forefront of AI innovation if we preemptively turn down opportunities that would help ensure that to be true.”
Data centers could end up becoming a windfall for many upstate counties stuck in a long economic decline, outlined in vivid detail by a shocking new Citizens Budget Commission report released Monday.
Hochul will sign an executive order implementing a “moratorium” on new air permits for so-called “hyperscale” data centers trying to tap into the Empire State’s electrical grid for up to a year. sdecoret – stock.adobe.com
The CBC report specifically found that areas like the North Country, Southern Tier, and Central New York continue to see population decline, job growth below the national average and tepid GDP growth. Many of those areas have access to ripe conditions for data center development such as relatively inexpensive power and access to water.
But Hochul’s fellow Dems in the state Legislature fumed that she had snubbed their legislation setting a more-restrictive moratorium than the one year pause.
A spokesman for state Senate Democratic Majority Leader Andrea Stewart-Cousins (D-Westchester) got testy with Hochul’s office on X Tuesday, snarking: “look forward to her signing our legislation!”
“We believe our legislation goes further and deals with the issue more directly. We hope she signs our bill, which has bipartisan support,” the spokesman, Mike Murphy, added to The Post.
Demand for data centers – massive, computer-packed complexes – exploded in recent years with the rise of AI and other high-intensity services.
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But the centers also spurred a nationwide backlash, with skeptics in arms over their massive electricity and water requirements – as well as the tax breaks they often receive.
Roughly half of New York voters polled by Siena University last month said they believed a one-year moratorium on large data centers was good for the state, while 21% said they thought it was a bad idea and 17% indicated they were somewhere in the middle.
Hochul’s attempt to thread the needle between embracing the AI industry and mollifying critics only applies “up to a year” on new applications – as well as those currently in the approval process – for data centers that’ll draw more than 50 megawatts of power.
She proposed to draft a study on the impacts of data centers during that year, along with suggested frameworks for localities to craft public benefits agreements with those operations that include green energy requirements and union-friendly prevailing wage standards.
The move falls short of a far more restrictive proposal passed by the state legislature this year that would’ve applied to data centers consuming more than 5 megawatts. The bill included additional requirements that 20-megawatt or more centers draw certain amounts of power from renewable sources by 2040.
North Country Assemblyman Scott Gray (R-Jefferson), who opposed the legislation, said he considered Hochul’s order an effective veto of the bill. He added that she should formally do so immediately.
“From the legislation it’s a partial win, right. I think it answers a political issue and has a chilling effect not only on data development but also energy development,” Gray said.
“We should be leveraging this type of development and not turning out backs on it.”
– Additional reporting by Haley Brown